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What Hurt CBS’s Entertainment Segment in 3Q17?

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Jan. 9 2018, Published 11:41 a.m. ET

Why CBS’s Entertainment Segment revenues fell

CBS’s (CBS) Entertainment segment, which contributes nearly 57% of the company’s total revenues, reported $1.8 billion in revenues for the 3Q17. The segment’s revenues fell 6.9% YoY (year-over-year), mainly due to lower content licensing and distribution revenues.

From the graph above, you can see how the Entertainment segment witnessed its lowest revenues in five quarters in 3Q17. During this period, its revenues fell a CAGR (compound annual growth rate) of 1.8%.

CBS’s content licensing and distribution revenues fell nearly 22.4% YoY in 3Q17, due to the timing of domestic television licensing sales. During the same period last year, the company made a good profit from the sales of different titles from its TV library.

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Lower advertising business

Apart from lower licensing revenues, CBS’s soft advertising revenues also affected its Entertainment segment growth. The advertising business in 3Q17 fell 3%, hurt by lower ratings, but increased rates slightly offset this effect. In 3Q17, one less Thursday Night Football match was aired on the CBS Television Network, compared with same period last year, which contributed to the decline.

In 3Q17, peers Comcast (CMCSA), Time Warner (TWX), and Viacom (VIAB) also reported earnings declines in the advertising businesses. Comcast and Time Warner saw YoY falls of 13.3% and 3.3% in revenues, respectively, while Viacom’s ad sales grew 6.4% during the same period.

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